The World’s Newest Call Center Billionaire

Meet the world’s newest call center billionaire. Laurent Junique is quite the globe-trotter: He’s a French citizen, his company is based in Singapore and he just listed that company, TDCX Inc., on the New York Stock Exchange last week.

Junique, TDCX’s 55-year-old founder and CEO, also just joined the billionaire ranks: Junique’s 87% stake in the firm is now worth $3 billion, thanks to a 34% rise in TDCX shares since the IPO on October 1—an offering that raised nearly $350 million for the company.

Started in 1995 in Singapore as Teledirect, an outsourced call center that handled calls, emails and faxes for a variety of clients, the company rebranded as TDCX in 2019 to reflect its expansion into a range of services including content moderation, marketing and e-commerce support. (CX is short for “customer experience” in the customer service industry.)

TDCX reported a $64 million net profit on $323 million sales in 2020, an improvement from the $54 million profit and $242 million in revenues it recorded in 2019. That growth came in part due to greater use of the services that TDCX offers, including tools that help companies improve the performance of employees working from home. Still, TDCX is highly dependent on two clients—Facebook and Airbnb—which collectively accounted for 62% of sales in 2020.

“Our successful listing reflects the world-class company that we have built and our position as the go-to partner for transformative digital customer experience services,” Junique said in a statement on the day of the IPO. “We are grateful for the support of our clients, many of whom are global technology companies that are fuelling the growth of the digital economy.”

Junique is the second call center billionaire that Forbes has tracked. The first, Kenneth Tuchman, founded Englewood, Colorado-based TTEC Holdings (formerly called TeleTech), in 1982; at nearly $2 billion, the firm had about six times the revenues of TDCX last year. Tuchman first became a billionaire in 2007. Several Indian billionaires, including HCL Technologies cofounder Shiv Nadar and Wipro’s former chairman Azim Premji, offer call centers as some of the services their firms provide.

Junique will maintain an iron grip on TDCX as a public company, controlling all of the firm’s Class B shares, which make up more than 86% of the firm’s equity and represent 98.5% of voting power. He owns those shares through Transformative Investments Pte Ltd, a company based in the Cayman Islands that is entirely owned—according to public filings with the Securities and Exchange Commission—by a trust established for the benefit of Junique and his family. While its headquarters are in Singapore, TDCX has also been incorporated in the Cayman Islands since April 2020; prior to the IPO, the firm was controlled by Junique through a Caymans-based holding company. A spokesperson for TDCX declined to comment.

Before launching TDCX as a 29-year-old in 1995, the French native cut his teeth studying advertising at the École Supérieure de Publicité in Paris and business administration at the nearby École Supérieure Internationale d’Administration des Entreprises, graduating in 1989. After a two-year stint at consumer goods giant Unilever, Junique—who had reportedly been cooking up business ideas since he was a child, including a glass recycling proposal he came up with at age 13—decided he wanted a more international career, but struggled to find a gig as a young graduate with little experience.

Armed with a suitcase and just enough cash to get by, he decamped to Singapore in 1995 to try his luck on the other side of the planet. Singapore offered a strategic location as a modern, English-speaking city at the heart of fast-growing Southeast Asia, and Junique started a call center called Teledirect aimed at businesses looking to cut costs and outsource customer service. Soon enough, Junique scored the firm’s first big client, an American credit card firm based in Singapore.

Two years later, in 1997, Junique sold a 40% stake in Teledirect to London-based advertising giant WPP for an undisclosed amount. Since then, TDCX expanded beyond call centers and now has offices in 11 countries across three continents, including locations in China, Japan and India. In 2018, Junique bought back WPP’s 40% stake in the call center business for about $28 million. Three years of growth later, the company now has a market capitalization of $3.5 billion.

With 2020 marking a record year for TDCX, Junique is hoping that the Covid-induced transition away from offices has made the firm’s products more necessary for its clients. “As consumers live more and more of their lives online, the expectation for things to be done simply, conveniently and on-demand will only increase,” Junique said in a statement.

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I’m a Staff Writer on the Wealth team at Forbes, covering billionaires and their wealth. My reporting has led me to an S&P 500 tech firm in the plains of Oklahoma; a

Source: The World’s Newest Call Center Billionaire

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Related Contents:

“BBC Three – The Call Centre, Series 1”. Bbc.co.uk. 2013-12-10. Retrieved 2017-12-10.

How Australia’s Keyman Investment offering Advisory Needs

Keyman Investment  is a Australia registered company formed with a motive to make the world earn easy money . Keyman Investment draws attention to safety of its clients investments. It means that analysts and experts in economics and finance do a huge work of monitoring, analysis and forecasting the situation on the markets. Their recommendations allow to respond quickly to processes occurring on the exchange, so there can be no price fluctuations which cause negative consequences.

They bring together a wide range of insights, expertise and innovations to advance the interests of their clients around the world. They offer a big number of 10% who promote their business  and build long-term and trusted relationships with their clients – wherever they are and wherever they invest.

They have professional highly trained and experienced team in their field of expertise enabling to provide the quality services demanded. They are seeking  to create value for their clients by constantly looking for innovative solutions throughout the investment process.

What started out as a market for professionals is now attracting traders from all over the world, and of all experience levels and all because of online trading and investment. They are also to providing a  comprehensive resource for clients new to the market or with limited experience trading Cryptocurrency investment, or interested in Forex, gold trade or stock market.

Bronze Plan

2% Daily for 6 Days
  • Minimum – $100
  • Maximum – $15,999
  • Principal Included
  • Instant Payout

Silver Plan

2.5% Daily for 6 Days
  • Minimum – $16,000
  • Maximum – $24,999
  • Principal Included
  • Instant Payout

Gold Plan

3% Daily for 6 Days
  • Minimum – $25,000
  • Maximum – $49,999
  • Principal Included
  • Instant Payout

Diamond Plan

4% Daily for 6 Days
  • Minimum – $50,000
  • Maximum – No Limit
  • Principal Included
  • Instant Payout

Through their unique combination of expertise, research and global reach, we work tirelessly to anticipate and advance what’s next—applying collective insights to help keep our clients at the forefront of change. They bring together a wide range of insights, expertise and innovations to advance the interests of our clients around the world.

Source: Keyman Investment Pty

How Investing in Strategic Partnerships Can Help Grow Your Business

How Investing in Strategic Partnerships Can Help Grow Your Business

The best entrepreneurs understand the power of people. Whether thinking about accessible healthcare or, more broadly, startup success, collaboration and partnerships have always been vital, even before the pandemic strengthened the need for a collective approach.

Of course, for entrepreneurs looking to scale their business, cash is a critical piece of the puzzle. For obvious reasons, access to capital enables a business to grow, whether that’s investing in research and development (R&D), expanding overseas, or hiring top talent.

But capital shouldn’t be treated as a silver bullet. Instead, founders should turn their attention toward creating strong, strategic partnerships to drive business growth. Working with other established organisations builds credibility, allowing businesses to make further connections and expand their operations.

Entrepreneurs, though, should learn exactly how to unlock beneficial relationships that will ultimately set them up for long-term victory. Partnerships must be win-win and goals aligned so that everyone comes out as beneficiaries.

Why connections matter.

When executed wisely, strategic partnerships can foster business growth. With the potential to form a critical part of any growing business, these partnerships benefit startups and corporates alike. For large corporations, startups and scaleups can fuel innovation; for early-stage founders, big companies can enable fresh revenue, scaling possibilities and credibility.

With established partners come established networks. Existing knowledge, suppliers and customers can make selling products on a larger scale much easier to achieve. This empowers startups to scale quickly, with that revenue used to reinvest in operations and innovation, fuelling further growth and making it easier to establish new business relationships with a wider pool of organisations.

What’s also important, particularly if operating in a crowded space such as healthcare, is the potential for impact. Healthcare solutions – rightly or wrongly – are often judged by the number of patients using them. So, establishing key strategic partnerships – as we’ve done with Microsoft, Allianz and Portuguese healthcare provider Médis – provides an avenue to millions of patients.

Infermedica experimented with different business models, but eventually settled on a B2B strategy over B2C as we had the potential to reach more patients through a partnership network. This accelerated on our goal to bring more accessible healthcare to all. Strategic partnerships enable startups to quickly build credibility and cut through loud crowded markets.

Investor partnerships can play a role as well. Relationships don’t need to simply need to be between providers, but investors can bring knowledge, connections and consultancy which can help startups to overcome growing challenges and open doors that may otherwise remain closed until certain milestones around size, revenue and customers have been reached. What’s key is ensuring both sides remain committed to moving forward together.

How to unlock the opportunity.

But what’s the best way to go about creating these relationships? For founders, the first step to achieving this is to remember that although partnerships are sealed between companies, they’re created by people and that human connection has to be built first. Talk to the potential partner to understand what they are truly trying to achieve and how a partnership could help them solve it.

Similarly, founders must understand their own goals and what they need from any relationship to ensure they keep progressing towards it. When discussions are open and the people are looked after, great relationships are forged.

Developing a partner program at an early stage: creating a network of trusted resellers and innovative partners also allows entrepreneurs to explore opportunities in their immediate area and beyond. Indeed, European founders shouldn’t simply look within their own country or continent for partnerships, by looking further afield they open themselves up to new ways of thinking and opportunities.

Partner programs and ecosystems establish a feedback community, each organization provides feedback which improves each other’s offerings, leading to greater growth and credibility for all. This also drives thoughts around integration, how compatible one offering is with another to ensure it truly adds value in a real-world environment. Collaboration with partners enables entrepreneurs to see how their product fits into the bigger picture which fuels wider innovation.

For example, Infermedica’s partner program enables organizations from all aspects of healthcare to collaborate with us and access our AI technology, enhancing and diversifying services which offer better end-user outcomes. Of course, there is still some way to go and things will never stop evolving. The top SaaS companies have on average around 350 integrations as they understand all of the potential engagement points and are establishing ecosystems that reflect them. The key takeaway: when creating partner ecosystems, always keep in mind how an end-user could potentially interact with your offering.

Take your time.

As in life, building a long-last relationship takes a lot of time and effort. So, while it can be tempting to rush into an exciting partnership or program, it’s vital to take your time to build trust and establish clear boundaries. Drawing on our own experience, it took more than a year to establish partnerships with Microsoft and Allianz, and it’s an ongoing process of building mutual trust and finding new ways to collaborate.

Remember that there should be no A and B side in partnerships. Each party brings their own benefits to the table. Combining knowledge and resources makes the relationship greater than the sum of its parts, delivering greater value to customers, industry and economy.

At all times, specificity is key to success. Be sure that the partnership is truly feeding into your overall strategy and that you have all the necessary resources to support you on your journey. Plan it well and take your time. It’s a long-term strategy that requires patience, commitment and perseverance. Rome was not built in a day, but the foundations of a long lasting relationship could start tomorrow.

Keep your goals in mind and ensure you’re going into every conversation with completely open eyes because when you find those strategic connections that just work, the opportunity for growth is truly great.

By: Tomasz Domino / Chief Operating Officer, Infermedica

Source: How Investing in Strategic Partnerships Can Help Grow Your Business

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Critics:

A strategic partnership (also see strategic alliance) is a relationship between two commercial enterprises, usually formalized by one or more business contracts. A strategic partnership will usually fall short of a legal partnership entity, agency, or corporate affiliate relationship. Strategic partnerships can take on various forms from shake hand agreements, contractual cooperation’s all the way to equity alliances, either the formation of a joint venture or cross-holdings in each other.

Typically, two companies form a strategic partnership when each possesses one or more business assets or have expertise that will help the other by enhancing their businesses. This can also mean, that one firm is helping the other firm to expand their market to other marketplaces, by helping with some expertise.

According to Cohen and Levinthal a considerable in-house expertise which complements the technology activities of its partner is a necessary condition for a successful exploitation of knowledge and technological capabilities outside their boundaries. Strategic partnerships can develop in outsourcing relationships where the parties desire to achieve long-term “win-win” benefits and innovation based on mutually desired outcomes.

No matter if a business contract was signed, between the two parties, or not, a trust-based relationship between the partners is indispensable. One common strategic partnership involves one company providing engineering, manufacturing or product development services, partnering with a smaller, entrepreneurial firm or inventor to create a specialized new product. Typically, the larger firm supplies capital, and the necessary product development, marketing, manufacturing, and distribution capabilities, while the smaller firm supplies specialized technical or creative expertise.

References

Micro Investing’s Magic Lies in Helping Your Favorite College Grad (or You) Gain Confidence

Micro Investing's Magic Lies in Helping Your Favorite College Grad (or You) Gain Confidence

When you first graduate from college, you might not feel comfortable dumping lots of money into unknown stocks or ETFs. Even if you’re not a new college graduate, you may want to consider a different approach when you don’t have a lot of extra cash lying around. Why not try micro investing?

Micro investing takes the daunting feeling away from investing, and therein lies its true magic. Let’s take a look at what it can do for you and how it can find a place in your portfolio.

What is Micro Investing?

Put simply, when you micro invest, you invest using small amounts of money. In other words, you pony up money to buy fractional shares of stocks or ETFs instead of full shares.

As of today, a single share of Amazon (NASDAQ: AMZN) costs $3,383.87. You may know you can’t even afford one share of Amazon, much less two shares!

Enter micro investing apps. You can buy Amazon for a much smaller amount — even really small amounts, like $10. You can also buy multiple securities to aim for diversification (always a great thing!) and lower your risk in the long run.

Why Micro Invest?

Small amounts, compounded over time, can make an impact. Compound interest makes your money grow faster. You can calculate interest on accumulated interest as well as on your original principal. Compounding can create a snowball effect: The original investments plus the income earned from those investments both grow.

Let’s say you save $1 per day. Your $1 per day adds up to $365 a year. Instead of spending that $365, you could stick it into a micro investing app at 5% interest per year. Your small amount would grow to almost $466 by the end of five years. At the end of 30 years, the amount you originally invested would grow to $1,578.

If you micro invested even more, your investment could grow even faster.

How Does Micro Investing Work?

Have you ever heard of the app, Acorns, which invests small change for you? That’s micro investing. A micro investing app rounds up your purchases to the dollar or makes automatic transfers for you. Think of micro investing as “spare change investing” — many apps round up your transactions from a linked bank account and invest the difference.

In other words, let’s say you go to Chipotle and order a mega burrito with those delicious limey chips. You spend $10.34. The app would take your remaining $0.66 and invest it.

You don’t have to invest a lot to get started, either. Stash allows you to get started with just a penny. Interested in micro investing for your favorite college grad or yourself? Take a look at the following steps to get started with micro investing.

Step 1: Choose a micro investing app.

What’s often the hardest part? Choosing the right investment app. Often the most important question comes down to this: Do you want to get your hands directly on your investments or do you want an app to pilot and direct your money for you?

Quick overview: Acorns and Betterment put a portfolio together for you based on your preferences. Stash and Robinhood allow you to choose the direction you want your money to take by allowing you to choose your own investments.

You may want to choose an app that lets you steer the ship yourself, particularly if you want to take a DIY approach to your investments at some point.

Step 2: Input your information.

Once you’ve chosen a micro investing app, it’s time to let the robo-advisor do its job. You input information to your micro investing app that helps it “understand” how to put together the best portfolio for you. You input your age, income, goals and risk tolerance and it’ll allocate your investment dollars accordingly.

Your money will go into a portfolio of exchange-traded funds (ETFs) based on the level of risk you choose. Based on the information you supply, you could end up thoroughly diversified with shares in many (sometimes hundreds) of different companies.

Step 3: Set up recurring investments.

You can set up investments to go into your investment account on a recurring basis for just a few dollars per month. You can also choose to make one-time deposits. Your robo-advisor will automatically rebalance your account if you have too much invested in a particular asset class. Setting up recurring investing means that you’ll invest without thinking about it. (You’ll never miss pennies!)

Step 4: Don’t quit there.

You can easily track your earnings when you micro invest because those apps are seriously slick. You can even project your earnings through the app’s earnings calculator so you don’t have to wonder how much you’ll have later on.

However, this is important: Remember that micro investing may not make you rich (if, in fact that is your goal). You probably can’t save enough for retirement through micro-investing, either. You probably also won’t net enough to save for larger goals, such as a down payment on a home. You may generate a few hundred dollars a year, which might allow you to save enough to fund an emergency fund, but that’s about it.

The real win involves building the confidence needed to invest. Consider other ways you can invest, such as investing money in a 401(k) or a Roth IRA after you get comfortable with micro investing.

Micro Investing Could Work Wonders

Micro investing can work wonders by breaking down barriers to investing. One of the biggest complaints from young students just starting out is that it’s too expensive to invest.

Micro investing can give you or a new grad the confidence to try bigger things, starting with baby steps. If micro investing is what it takes for a new grad to get more comfortable with smaller investments (then grow investments later), then it’s a great option for young investors just getting started.

By:

Source: Micro Investing’s Magic Lies in Helping Your Favorite College Grad (or You) Gain Confidence

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Critics:

Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings and checking accounts; microinsurance; and payment systems, among other services. Microfinance services are designed to reach excluded customers, usually poorer population segments, possibly socially marginalized, or geographically more isolated, and to help them become self-sufficient.[2][3]

Microfinance initially had a limited definition: the provision of microloans to poor entrepreneurs and small businesses lacking access to credit.[4] The two main mechanisms for the delivery of financial services to such clients were: (1) relationship-based banking for individual entrepreneurs and small businesses; and (2) group-based models, where several entrepreneurs come together to apply for loans and other services as a group.

Over time, microfinance has emerged as a larger movement whose object is: “a world in which as everyone, especially the poor and socially marginalized people and households have access to a wide range of affordable, high quality financial products and services, including not just credit but also savings, insurance, payment services, and fund transfers.

Proponents of microfinance often claim that such access will help poor people out of poverty, including participants in the Microcredit Summit Campaign. For many, microfinance is a way to promote economic development, employment and growth through the support of micro-entrepreneurs and small businesses; for others it is a way for the poor to manage their finances more effectively and take advantage of economic opportunities while managing the risks. Critics often point to some of the ills of micro-credit that can create indebtedness. Many studies have tried to assess its impacts.

New research in the area of microfinance call for better understanding of the microfinance ecosystem so that the microfinance institutions and other facilitators can formulate sustainable strategies that will help create social benefits through better service delivery to the low-income population.

Due to the unbalanced emphasis on credit at the expense of microsavings, as well as a desire to link Western investors to the sector, peer-to-peer platforms have developed to expand the availability of microcredit through individual lenders in the developed world. New platforms that connect lenders to micro-entrepreneurs are emerging on the Web (peer-to-peer sponsors), for example MYC4, Kiva, Zidisha, myELEN, Opportunity International and the Microloan Foundation.

Another Web-based microlender United Prosperity uses a variation on the usual microlending model; with United Prosperity the micro-lender provides a guarantee to a local bank which then lends back double that amount to the micro-entrepreneur. In 2009, the US-based nonprofit Zidisha became the first peer-to-peer microlending platform to link lenders and borrowers directly across international borders without local intermediaries.

See also

Investment Giant Fidelity Will Let Your Teen Trade Stocks—For Free

Fidelity Investments Earns

As interest in the stock market grows and equities continue to soar, investment giant Fidelity said Tuesday that it will launch new investing accounts just for teens.

The offerings for 13- to 17-year-olds—limited to those teenagers whose parents or guardians also invest with Fidelity—will include ways to save and deposit money, a debit card and investing capabilities, all accessible on a mobile app.

Teens will be able to buy and sell U.S. equities, Fidelity’s own mutual funds and ETFs without any fees or commissions.

To open the account, a teen’s parent or guardian must enter into a brokerage agreement with Fidelity, the Wall Street Journal reported, and after that the account—and power to make trades—is transferred to the teen.

Parents will be able to monitor the account’s activity and will retain the ability to close the account at any time, the Journal reported, and teens won’t be able to trade options or borrow money to fund trades.

Crucial Quote

“Fidelity is committed to responsibly supporting young investors,” Jennifer Samalis, senior vice president of acquisition and loyalty at Fidelity Investments, said in a statement. “Importantly, our goal for the Fidelity Youth Account is to encourage young Americans to learn through action and foster meaningful family conversations around financial topics.”

Big Number

$10.3 trillion. That’s how much money Fidelity manages. It’s one of the largest stock brokerage firms in the United States.

Tangent

Old-guard brokerage firms and startups alike are actively pursuing the next generation of investors. Greenlight, a startup that offers debit cards and investing services for kids, was recently valued at $2.3 billion.

Key Background

Fidelity’s new offering was in the works before the memestock trading frenzy that sent stocks soaring and captivated investors earlier this year, the Journal reported.

In January, retail traders from online communities including Reddit’s r/WallStreetBets and the popular brokerage app Robinhood—which is also aimed at making investing simpler for young investors—pitted themselves against Wall Street institutions which had placed bets that a handful of previously unpopular stocks would fall.

That resulted in a short squeeze that sent Gamestock and other stocks soaring and ignited a national debate about regulation, risky trades and the what some viewed as gamified app-based trading.

I’m a breaking news reporter for Forbes focusing on economic policy and capital markets. I completed my master’s degree in business and economic reporting at New York University. Before becoming a journalist, I worked as a paralegal specializing in corporate compliance.

Further Reading

Fidelity’s Pitch to America’s Teens: No-Fee Brokerage Accounts (Wall Street Journal)

With Debit Cards And Investing For Kids, Fintech Startup Greenlight Doubles Valuation To $2.3 Billion (Forbes)

It’s Not Just Crypto Crashing: Here Are All The Market Bubbles Popping So Far This Year (Forbes)

Goldman Sachs Says Stock Picking Becoming Harder, But Tesla, Twitter And Etsy Have Potential. Here’s Why (Forbes)

Source: Investment Giant Fidelity Will Let Your Teen Trade Stocks—For Free

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7 Quick Ways to Make Money Investing $1,000

If you’re sitting on at least $1,000 and it’s scratching an itch in your pocket, consider investing it rather than spending it on something frivolous. But the question that then beckons us is: Can you really make quickly investing with just $1,000?

The answer to that is a resounding, “Yes.”

While there are plenty of ways you can make money fast by doing odd jobs or generating it through things like affiliate marketing or email marketing, actually making money by investing with just $1,000 might present more challenges, and frankly, more risks. That is, of course, unless you know what you’re doing.

However, all risks aside, even if you’re living paycheck-to-paycheck, you still may be able to conjure up $1,000 to put towards an investment if you’re creative.

Before you dive in, there are some mindset principles that you need to adhere to. Moving beyond the scarcity mentality is crucial. Too many of us live our lives with the notion that there’s never enough of things to go around — that we don’t have enough time, money, connections or opportunities to grow and live life at a higher level.

That’s just a belief system. Think and you shall become. If you think you can’t get rich or even make a sizable amount of money by investing it into lucrative short-term investment vehicles, then it’s much more of a mindset issue than anything else. You don’t need to invest a lot of money with any of the following strategies.

Sure, having more money to invest would be ideal. But it’s not necessary. As long as you can identify the right strategy that works for you, all you need to do is scale. It’s similar to building an offer online, identifying the right conversion rate through optimization, then scaling that out. If you know you can invest a dollar and make two dollars, you’ll continue to invest a dollar.

Start small. Try different methods. Track and analyze your results. Don’t get so caught up on how you’re going to get wildly rich overnight. That won’t happen. But if you can leverage one of the following methods to make money by investing small, short bursts of capital, then all you have to do is scale — plain and simple. You don’t have to overthink it. 

How to invest $1,000 to make money fast

If you have $1,000 to invest, you can make money a variety of ways. But there are some methods that trump others. The play here is speed. We’re not talking about long-term, buy-hold strategies. Those are terrific if you’re looking to invest your capital over at least a two- to five-year period. We’re talking about ways you can make money fast.

Even when it comes to markets that might take time to move or have longer cycles, investments can often turn into realized profits and quick gains by leveraging the right strategies. What’s the right strategy? Sure, long-term works. Real estate and other time-intensive strategies will eventually get you there.

Raghee Horner of Simpler Futures says that “long-term interest rates are the next big ,” while Jim Cramer of Mad Money says that “there are tons of people who are late to trends by nature and adopt a trend after it’s no longer in fashion.” By jumping in and out of long-term investments like that, you’re far more likely to lose your shirt than if you time your short-term plays just right.

It’s not so much about trying to catch the latest trend. It’s not about becoming a webinar guru like Jason Fladlien or Liz Benny — or even building out sales funnels or optimizing your conversions. Investing your money is more about paying careful attention to indicators that can really move the needle in the short-term as opposed to the longer term. It’s also about leveraging and hedging your investments the right way without putting too much risk on the line.

That doesn’t mean that you don’t need a long-term strategy. You definitely do. But if you’re looking to create some momentum and generate some capital quickly, in the near-term, then the following investment strategies might help you do just that.

1. Play the .

is not for the faint of heart. It takes grit and determination. It takes understanding the different market forces at play. This isn’t something intended for amateurs. But, if learned and learned well, it is a way where you can quickly — within the span of hours — make a significant amount of money with a relatively small investment.

There are also ways to hedge your bets when it comes to playing the stock market. Whether you play the general market or you trade penny stocks, ensure that you set stop-loss limits to cut any potential for significant depreciations. Now, if you’re an advanced trader, you likely understand that market makers often move stocks to play into either our fear of failure or our greed. And they’ll often push a stock down to a certain price to enhance that fear and play right into their pockets.

When it comes to penny stocks, this is further exaggerated. So you have to understand what you’re doing and be able to analyze the market forces and make significant gains. Pay attention to moving averages. Often, when stocks break through 200-day moving averages, there’s potential for either large upside or big downside.

2. Invest in a money-making course.

Investing in yourself is one of the best possible investments you can make. While you might not be able to pinpoint an actualized return on investment, there’s no money that’s better spent. Invest in yourself. Invest in your education. Learn. Adapt. Grow. Discover what you’re passionate about.

There are loads of money-making courses on the internet. The hard part is choosing the right one. From ebooks to social media marketing, search engine optimization and beyond, the possibilities are endless. While many money-making gurus might pop up on social media, not all courses are created alike. Spend time doing your due diligence and research to choose the one that’s right for you.

3. Trade commodities.

Trading commodities like gold and silver present a rare opportunity, especially when they’re trading at the lower end of their five-year range. Metrics like that give a strong indication on where commodities might be heading. Carolyn Boroden of Fibonacci Queen says, “I have long-term support and timing in the silver markets because silver is a solid hedge on inflation. Plus, commodities like silver are tangible assets that people can hold onto.”

The fundamentals of economics drives the price of commodities. As supply dips, demand increases and prices rise. Any disruption to a supply chain has a severe impact on prices. For example, a health scare to livestock can significantly alter prices as scarcity reins free. However, livestock and meat are just one form of commodities.

Metals, energy and agriculture are other types of commodities. To invest, you can use an exchange like the London Metal Exchange or the Chicago Mercantile Exchange, as well as many others. Often, investing in commodities means investing in futures contracts. Effectively, that’s a pre-arranged agreement to buy a specific quantity at a specific price in the future. These are leveraged contracts, providing both big upside and a potential for large downside, so exercise caution. 

4. Trade cryptocurrencies.

Cryptocurrencies are on the rise. While trading them might seem risky, if you hedge your bets here as well, you could limit some fallout from a poorly-timed trade. There are plenty of platforms for trading cryptocurrencies as well. But before you dive in, educate yourself. Find courses on platforms like Udemy, Kajabi or Teachable. And learn the intricacies of trading things like Bitcoin, Ether, Litecoin and others.

While there are over 3,000 cryptocurrencies in existence, only a handful really matter today. Find an exchange, research the trading patterns, look for breakouts of long-term moving averages and get busy trading. You can use exchanges like Coinbase, Kraken or Cex.io, along with many others, to make the actual trades.

5. Use peer-to-peer lending.

Peer-to-peer lending is a hot investment vehicle these days. While you might not get rich investing in a peer-to-peer lending network, you could definitely make a bit of coin. Which lending platform do you use? Today, there are many to choose from, but the most popular ones include Lending Club, Peer Form and Prosper.

How does this work? Peer-to-peer lending platforms allow you to give small bursts of capital to businesses or individuals while collecting an interest rate on the return. You get more money than you would if you placed it in a savings account, plus your risk is limited because the algorithms are doing much of the work for you.

Once you identify the offer, you can dig in and do some research — then, you can either take the deal or not. You’ll have your risk evaluated based on a proprietary algorithm that includes employment and credit history, and you’ll be able to make the decision to invest based on a variety of well-thought-out data.

6. Trade options.

When it comes to options, Tom Sosnoff at Tastyworks says, “Trade small and trade often.” What type should you trade? There are loads of vehicles, such as FOREX and stocks. The best way to make money by investing when it comes to options is to jump in at around 15 days before corporate earnings are released. What type should you buy? Money calls.

The optimal time to sell those money calls is the day before the company releases its earnings. There’s just so much excitement and anticipation around earnings that it typically drives up the price, giving you a consistent winner. But don’t hold through the earnings. That’s a gamble you don’t want to take if you’re not a seasoned investor, says John Carter from Simpler Trading.

7. Flip real estate contracts.

Making money with real estate might seem like a long-term prospect, but it’s not. There are ways you can take as little as $500 to $1,000 and invest it in flipping real estate contracts to make money fast. How? Use a system like Kent Clothier’s REWW to first understand how the market works. It’ll then provide you with the data and tools to identify vacant homes, distressed sellers and cash buyers.

While most people think that real estate is won by flipping traditional homes and doing the renovations yourself, the fastest money you can make in real estate involves flipping the actual contract itself. It’s arbitrage. Identify the motivated sellers and cash buyers, bring them together and effectively broker the deal. It might seem odd on the first go, but once you get the hang of it, you can become a mini-mogul in the real estate industry by simply scaling out this one single strategy. It works, and it’s touted by some of the world’s most successful real estate investors.

R.L. Adams

 

By: R.L. Adams / Entrepreneur, software engineer, author, blogger and founder of WanderlustWorker.com

Source: 7 Quick Ways to Make Money Investing $1,000

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Strong Buyout Fund Returns Drive Private Equity Stocks Higher

Private equity

Over the past decade, as private equity firms like Blackstone, KKR and Carlyle Group have grown into a gargantuan size and raised buyout funds nearing or eclipsing $20 billion, one critique of their cash gusher was that it would inevitably drive fund returns lower. Now, as the U.S. economy emerges from the Coronavirus pandemic and markets soar to new record highs, recent earning results from America’s big buyout firms reveal a trend of rising returns even as funds surged in size.

Fueled by piping-hot financial markets, returns from the flagship private equity funds of Blackstone, KKR and Carlyle are on the rise. Mega funds from these firms that recently ended their investment period are all running ahead of their prior vintages and raise the prospect that PE firms can achieve net investment return rates nearing or exceeding 20%.

Carlyle, which reported first quarter earnings on Thursday morning, is the newest firm to exhibit rising performance. Its $13 billion North American buyout fund, Carlyle Partners VI, which was launched in 2014 and ended its investment period in 2018, is now being marked at a 21% gross investment rate of return and a net return of 16%, or a 2.2-times multiple on invested capital.

The fund has realized $8.8 billion of investments, like insurance brokerage PIB Group and consultancy PA Consulting, and sits on a portfolio marked at nearly $20 billion. The returns are two-to-three percentage points ahead of Carlyle Partners V, the flagship buyout fund it raised just before the financial crisis. That fund is on track to earn a net IRR of of 14%, or a multiple of 2.1-times its invested capital.

Rising fund profitability, even at scale, is helping to fuel Carlyle’s overall profitability. Net accrued performance fees from Carlyle VI ended the quarter at nearly $1.4 billion and Carlyle sits on a record $3.2 billion in such performance fees that will likely be fully realized in 2021. The firm’s once-lagging stock has recently risen to new record highs.

The trend is even more clear at Blackstone and KKR, which have both used spongy IPO markets to realize multi-billion dollar investment windfalls in recent months.

Blackstone’s flagship $18 billion private equity fund, Blackstone Capital Partners VII, was closed in May 2016 and ended its investment period in February 2020, just before the Covid-19 economic meltdown. After taking public or exiting investments like Bumble, Paysafe and Refinitiv, this fund is now marked at a 18% net investment rate of return, five percentage points better than its prior fund, which raised in the aftermath of the 2008 crisis.

In the past two quarters, the fund has been the single biggest driver of Blackstone’s record profitability, generating over $1.6 billion in combined accrued performance fees. In the first quarter, the fund was responsible for 82-cents in quarterly per-share profits, filings show. Overall, Blackstone sits on a record $5.2 billion in net accrued performance fees.

At KKR, it’s a similar story. The firm’s $8.8 billion Americas XI fund, which was raised in 2012 and ended its investment period in 2017, is generating net IRRs of 18.5%, or a 2.2-times multiple on invested capital, according to the its annual 10-k filing from February. That sets up the fund to be KKR’s most profitable buyout fund since the 1990s.

KKR’s first quarter results, set to be released in early May, may show even bigger windfalls and higher returns. Its recent public offering of Applovin looks to be one of the greatest windfalls in the firm’s history, bolstering returns and profits for its even newer $13.5 billion Americas Fund XII. Asia could also be an area of big returns as its $9 billion Asian Fund III monetizes investments.

As returns rise, PE firms have seen their stocks soar to new record highs.

Once a laggard, Carlyle is up 36% year-to-date to a new record high above $42, according to Morningstar data. The firm, now led by chief executive Kewsong Lee, has returned an annual average of 23% over the past five-years.

KKR has done even better, rising 40% this year alone and 125% over the past 12-months. It’s five and ten-year total stock returns are now 33% and 13.5%, respectively.

The top performer in the industry is Blackstone Group, which recently eclipsed a $100 billion market value. Up 39% this year alone, Blackstone’s generated an average annualized total return of nearly 19% over the past decade, which is about five-percentage-points better annually than the S&P 500 Index.

Bottom Line: With public markets hitting new record highs, buyout firms are reporting LBO returns not seen since the 1990s. Their stocks, which once badly lagged the S&P 500, are beginning to beat the market.

I’m a staff writer and associate editor at Forbes, where I cover finance and investing. My beat includes hedge funds, private equity, fintech, mutual funds, mergers, and banks. I’m a graduate of Middlebury College and the Columbia University Graduate School of Journalism, and I’ve worked at TheStreet and Businessweek. Before becoming a financial scribe, I was a member of the fateful 2008 analyst class at Lehman Brothers. Email thoughts and tips to agara@forbes.com. Follow me on Twitter at @antoinegara

Source: Strong Buyout Fund Returns Drive Private Equity Stocks Higher

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Wall Street Week Ahead: Investors Look To Utilities To Weather Any Market Rout

NEW YORK: Investors looking for ways to protect themselves from a potential market downturn and rising inflation have been warming to utilities, sometimes seen as bond substitutes, as attractive alternatives.

The S&P 500 utilities index has outperformed the broader market this month, rising 9.3 per cent so far compared with a 4.3 per cent gain in the benchmark index and leading gains among sectors for March.Driving the gains may be a defensive move by investors to position themselves against a potential slide in equities, with worries mounting over higher inflation as seen in the jump in 10-year Treasury yields and over pricey stock valuations, some strategists say.Utilities tend to do better in a downturn because they pay dividends and offer stability. “It’s a little defensive positioning,” said Joseph Quinlan, head of CIO market strategy for Merrill and Bank of America Private Bank in New York.

While the economy is expected to rebound sharply this year from the impact of the coronavirus, that optimism may be dampened by next year if unemployment remains elevated and growth slows more than expected. Some investors say utilities also may be benefiting from hopes that there will be a bigger push toward green energy under the Biden Administration. President Joe Biden is expected to unveil next week a multitrillion-dollar plan to rebuild America’s infrastructure that may also tackle climate change.
“If you get any acceleration of the decarbonization rhetoric, that’s a positive for utilities,” said Shane Hurst, managing director and portfolio manager at ClearBridge Investments. But whether the recent surge in utilities has further room to run is a matter of debate, and many strategists and investors, including Quinlan, still favor cyclicals that benefit from economic growth over defensive-leaning groups such as utilities.

The gains in utilities have come amid a rotation from technology and other growth stocks into so-called value stocks. The Nasdaq Composite has fallen in March after four straight months of gains. Cyclicals, which investors dumped during the early part of the pandemic, have benefited the most from the rotation. An end-of-quarter rebalancing of investment portfolios by institutional investors may be adding to the recent rotation from growth into value.
While utilities still sharply lag gains for the year compared with many cyclical sectors, including energy, they are also considered inexpensive at this point by some investors. After a weak performance in 2020, utilities “are just really, really cheap at the moment,” Hurst said. “And that is an attractive place to be when you’re in a market that’s very much earnings driven.”

The utilities sector is trading at 18.3 times forward earnings compared with a price-to-earnings ratio of 22.1 for the S&P 500 index and 26 for technology, according to Refinitiv’s data. David Bianco, Americas chief investment officer for DWS, which has an overweight rating on utilities, said interest rates are still low, but utilities offer inflation protection because they would be able to raise their prices.

As of Friday, the S&P 500 utilities sector had a dividend yield of 3.3 per cent, the second-highest among S&P sectors after consumer staples, and well above the 1.5 per cent yield for the S&P 500, according to data from S&P Dow Jones Indices.Benchmark 10-year note yields were at 1.660 per cent on Friday after reaching a one-year high of 1.754 per cent the week before. “Utilities is our most preferred bond substitute,” said Bianco.

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How To Solve Climate Change: Bill Gates Wants You To Know Two Numbers

Bill Gates Climate

Bill Gates wants you to know two numbers: 51 billion and zero. The former is the number of tons of greenhouse gases typically added to the atmosphere each year as a result of human activities. The latter is the number of tons we need to get to by 2050 in order to avert a climate crisis.

Gates has a plan for how to go from 51 billion to zero, and he’s happy to say it doesn’t come with a price tag in the trillions of dollars. As you might expect from a guy who made his fortune in technology, the billionaire’s suggested solution is tied in large part to innovation.

He spells out his plan in a new book, How To Avoid A Climate Disaster: The Solutions We Have And The Breakthroughs We Need, to be released on February 16. Ahead of the book launch, Gates talked to Forbes about why he wrote the book. He also shared details the book doesn’t get into, including how much he’s invested in zero-carbon companies, which ones he’s most excited about, including a new kind of nuclear power plant, and what he’s likely to invest in next. 

Goal number one of the book, says Gates, is to clearly lay out which sectors of the economy are producing the 51 billion tons of greenhouse gases the world typically adds to the atmosphere each year. “The actual numeric framework, which is the most basic thing for any problem you want to tackle…that’s really been missing,” Gates says in a video interview from a conference room in his offices in Seattle. (See table for the percentage breakdown.)  The goal we as a planet need to aim for: zero emissions by 2050. Gates is optimistic that as hard as it sounds, we can get there.


How It Adds Up Globally: 51 Billion Tons

Emissions dropped about 5% in 2020 due to the pandemic, Gates estimates. But in a normal year the world adds 51 billion tons of greenhouse gases to the atmosphere, Gates writes in his book.

                            

Gates admits, both in his book and when we spoke, that he is an imperfect messenger on climate change. “The very idea that one person is saying they know what we should do —appropriately, there is some pushback,” he says. In his book, he writes, “The world is not exactly lacking in rich men with big ideas about what other people should do, or who think technology can fix any problem.” He admits to owning big houses and flying in private jets, though he tells me that he buys carbon offsets for $400 a ton for the private jet flights he takes. “I can’t deny being a rich guy with an opinion. I do believe, though, that it is an informed opinion, and I am always trying to learn more,” he writes.

Gates presciently warned in a 2015 talk about the dangers of a global pandemic and what we’d need to do to prepare for it. Similarly, this is not his first public prescription for the climate. In 2010 he gave a TED talk calling for the need to eliminate carbon emissions by 2050. He’s continued to consult experts in the field and delve into the latest in climate science and policy. In 2015 he got involved in the Paris Climate Summit, calling France’s then president, Francois Hollande, and encouraging him to get countries to agree to raise their R&D budgets for clean tech innovation. Twenty countries signed on. Says Gates, “Although we did not see all those countries double their R&D budgets, we did see some increase. That’s sort of when the field started to focus on can we get this innovation to take place.”

To help put a framework around progress and the cost of new carbon-free innovations, Gates and his team came up with a term called “Green Premium” and introduced it in his blog, Gates Notes, in September last year. As he explains it, the Green Premium spells out the difference in cost between a product or process that doesn’t emit carbon with one that does. Green Premiums have fallen in the passenger car sector to the point where more people are buying electric cars (though Gates points out that just 2% of global auto sales are electric vehicles). In the industrial sector, however, Green Premiums are much higher. Says Gates, “The hardest problems to solve are in areas like steel and concrete and even transportation things like aviation fuel.” The problems he’s referring to: coming up with processes to make these products that don’t emit greenhouse gases. The research is in its early stages, and that’s where government R&D can play a role, Gates suggests.

What’s It All Going To Cost? 

In December, Gates suggested in his blog that the U.S. create a National Institutes of Energy Innovation to help the country take the lead in climate change innovation. The idea is to model it after the National Institutes of Health, the backbone of U.S. medical research, which has an annual budget of about $37 billion. Gates says current U.S. government R&D spending on energy innovation is about $7 billion annually; that would need to be quintupled to match government spending on the NIH.

Another suggestion from Gates: shift the tax credits now available for solar and wind to more nascent areas like offshore wind, energy storage and new types of steel. “If you do that, and maybe double or triple the amount you spend on those tax benefits, then I do think that will be just a monumental contribution from the Biden administration,” he explains.

Whatever tech innovation comes out of the U.S. or elsewhere has to be affordable enough for countries like India to adopt it, Gates points out. Right now, the U.S. accounts for 14% of the world’s emissions. If just the U.S. gets to zero carbon emissions, we won’t be solving the problem globally.

Where Gates Is Investing

Gates, whose $124 billion fortune stems from an estimated 1% stake in Microsoft and a variety of other investments, says in the book he’s put “more than $1 billion” into companies working toward zero emissions. How much more? Altogether, he tells Forbes it’s about $2 billion. He describes himself as perhaps the biggest funder of direct air capture technologies—methods to capture carbon from the air. Two of the more well-known companies he’s been an investor in are producing plant-based meats: Impossible Foods and Beyond Meat. Some of his investing he categorizes as philanthropic, like the money he’s put toward an open source climate model that aims to show how electricity generation will work in long periods of tough weather when wind and solar would be shut down.

His biggest bet has been on TerraPower, a nuclear power company with a reactor that uses depleted uranium as its fuel. Gates founded the company with a few others more than a decade ago. In 2017, TerraPower formed a joint venture with a Chinese company and was planning to produce its first reactor in China. That deal was scuttled by the U.S. government, which in late 2019 blocked U.S. cooperation with China on civilian nuclear power. Now the plan is to build a demonstration plant somewhere in the U.S. In October the U.S. Department of Energy awarded $80 million to TerraPower toward construction of the plant; the agreement is that half of the funding will come from the private sector. Gates says, “That’s coming largely from me.”

His hope is that the demonstration plant will be built within five to seven years. “If things go well, that means that maybe in 10 years, commercial plant builders would take that design and build it ideally in the hundreds—which is what you need to have an impact on climate change.”

Gates has also invested in zero-carbon companies through Breakthrough Energy Ventures, a group he assembled that launched in December 2016. “It was a lot easier to raise the money than I expected,” he says. “I made about 22 calls and got about 20 yeses for the first billion.” Investors include billionaires such as Jeff Bezos, Vinod Khosla, John Arnold and John Doerr; Gates says he’s the largest investor. So far Breakthrough Energy Ventures has invested in 40 companies; One, QuantumScape, which is developing lithium metal batteries for electric vehicles and has no revenues yet, went public through a SPAC last November. Though many of the companies are still early stage, Gates describes some as “really wild,” including QuidNet, which is working to store electricity by pumping water into pressured underground wells; when energy is needed, the water is released and goes through a turbine, creating electricity.

Breakthrough Energy Ventures raised another $1 billion fund in January, with most of the same initial investors and some newcomers. (Gates didn’t disclose names.) He says he’s the largest investor in the latest fund, too. The new fund will look to invest in more of the industrial processes like low-carbon cement and steel production as well as technologies to capture carbon from the air, Gates says.

Over the next five years, Gates says “I’ll put in at least $2 billion” toward zero-carbon technologies. But while a total of $4 billion is a lot of money, for someone worth more than $120 billion, it’s a small sliver of his overall investments. Says Gates, “It’s more limited by what is out there that can have a high impact.”

genesis-3-1

One of Gates’ other investments that’s been in the news recently seems to fly in the face of his zero-carbon focus. In early February, Gates’ investment arm, Cascade, partnered with Blackstone Group and private equity firm Global Infrastructure Partners in a $4.7 billion deal to buy Signature Aviation, the world’s largest operator of private jet bases. Private jet travel has been booming during the pandemic, but such travel emits a heck of a lot of greenhouse gases. How does he square the deal with the premise of his book? A spokesperson for Gates did not reply to the question.

Will Gates’ book influence policy makers and move the needle toward innovation in zero-carbon technologies? It helps that combating climate change is already one of the Biden administration’s top four priorities. Given that the book is addressing weighty material, it’s relatively easy to read, sprinkled with Gates’ personal observations  and even a photo of him with his son Rory on a visit to a geothermal power plant in Iceland. (Gates says he and Rory liked to visit power plants for fun.) He mentions that he drives an electric car the Porsche Taycan Turbo, which he describes to Forbes as “ridiculously nice and ridiculously expensive” — that sells for $150,000 or more. (He’s such a fan that he got one of the first demo models, he adds.)

If nothing else, Gates wants to get people talking. “My hope is that we can shift the conversation by sharing the facts with the people in our lives— our family members, friends, and leaders. And not just the facts that tell us why we need to act, but also those that show us the actions that will do the most good,” he writes.

A bigger measure of his success will be whether the Biden administration adopts any of his policy proposals. Says Gates, “I do think that with those increases [in spending], we’ll be doing exactly what we need to do, not just for us, but for the entire world.”

Follow me on Twitter or LinkedIn. Send me a secure tip.

I’m a San Francisco-based Assistant Managing Editor with a focus on the world’s richest people. I oversee the massive reporting effort that goes into Forbes’ annual World’s Billionaires list and The Forbes 400 Richest Americans list. The former gets me to use my rusty Spanish and Portuguese. In 2014, I won an Overseas Press Club award for an article I wrote about Saudi Arabian billionaire investor Prince Alwaleed bin Talal; I also won a Gerald Loeb Award with co-author Rafael Marques de Morais for an article we wrote about Isabel dos Santos, the eldest daughter of Angola’s former president. Over more than two decades, reporting for Forbes has taken me to 17 countries on four continents, from the streets of Manila to palaces in Saudi Arabia and Mexico’s presidential residence. Follow me on Twitter @KerryDolan My email: kdolan[at]forbes[dot] com Tips and story ideas welcome

Source: How To Solve Climate Change: Bill Gates Wants You To Know Two Numbers

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Bill Gates outlines his vision for a global green revolution. He tells Zanny Minton Beddoes, our editor-in-chief, how renewable energy is merely the first step in combatting climate change. 00:00 – How to fund a green economy 00:38 – Lessons from the pandemic 01:52 – Behaviour change v innovation in technology 03:36 – Most promising renewable technologies 04:31 – Private sector investment in green technology 06:30 – How essential are carbon prices? 07:50 – Net-zero emissions targets for businesses 09:39 – America’s role in climate-change action 12:40 – What are the odds for success of green innovation? Sign up to The Economist’s fortnightly climate-change newsletter: https://econ.st/3midEwG Find our most recent climate-change coverage: https://econ.st/37epi7u The World In 2021: the world could turn a corner on climate change: https://econ.st/37hdgKp
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SPACs Are A New Part Of The Same Market Story

The most unique feature of the modern market is how fast everything happens. As we wrote back in November, the 2020 stock market essentially plotted the entire seven-year journey investors endured around the financial crisis in just seven months.

And as markets have moved to more quickly and efficiently discount all future outcomes, a series of mini-bubbles have become a defining feature of market today. And it appears SPACs (Special Purpose Acquisition Company) are taking their seat at the table.

George Livadas, portfolio manager at Upslope Capital Management, wrote cautiously about the SPAC space in his fourth quarter investor letter published Wednesday. “In recent years we’ve seen a number of mini-bubbles come and go rapidly (pot stocks, short vol, blockchain, etc),” Livadas writes.

“We’ve also seen what looks like a general speeding up of broader market regimes (flash bear markets of late 2018 and early 2020). For the SPAC bubble to be exempt from this phenomenon, one must assume that SPACs really are a better, lasting mousetrap vs. traditional IPOs. This seems highly unlikely.”

Livadas also cites impending lock-up expirations and the first full run of detailed quarterly results from many companies taken public by SPAC sponsors as risks for the space. Livadas disclosed that as of the end of the fourth quarter, Upslope was short 11 SPACs and two electric vehicle stocks, all as-yet unnamed.

But even the discussion of SPACs as a sector or asset class unto itself proves the enthusiasm has gone too far. SPACs are, after all, just a financing scheme, an alternate route for companies to go public that requires fewer disclosures than a traditional IPO or direct listing process. In exchange for this easier process, the company being taken public offers a bigger part of itself for sale to the SPAC sponsor.

Traditionally, this higher level of dilution made SPACs attractive for turnaround stories. Existing shareholders in a business that is struggling are typically more willing to give up an ownership stake in exchange for fresh capital, or a new management team running the company.

Though as Goldman Sachs strategists noted back in December, the sectors now being targeted by SPAC sponsors are no longer beaten down turnaround stories but high growth areas like pharma, tech, and electric vehicles. The SPAC has shifted from being a last resort to a first choice for many companies.

What Is a Special Purpose Acquisition Company (SPAC)?

A special purpose acquisition company (SPAC) is a company with no commercial operations that is formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company. Also known as “blank check companies,” SPACs have been around for decades. In recent years, they’ve become more popular, attracting big-name underwriters and investors and raising a record amount of IPO money in 2019. In 2020, as of the beginning of August, more than 50 SPACs have been formed in the U.S. which have raised some $21.5 billion.

Key Takeaways

  • A special purpose acquisition company is formed to raise money through an initial public offering to buy another company.
  • At the time of their IPOs, SPACs have no existing business operations or even stated targets for acquisition.
  • Investors in SPACs can range from well-known private equity funds to the general public.
  • SPACs have two years to complete an acquisition or they must return their funds to investors.

How a SPAC Works

SPACs are generally formed by investors, or sponsors, with expertise in a particular industry or business sector, with the intention of pursuing deals in that area. In creating a SPAC, the founders sometimes have at least one acquisition target in mind, but they don’t identify that target to avoid extensive disclosures during the IPO process. (This is why they are called “blank check companies.” IPO investors have no idea what company they ultimately will be investing in.) SPACs seek underwriters and institutional investors before offering shares to the public.

The money SPACs raise in an IPO is placed in an interest-bearing trust account. These funds cannot be disbursed except to complete an acquisition or to return the money to investors if the SPAC is liquidated. A SPAC generally has two years to complete a deal or face liquidation. In some cases, some of the interest earned from the trust can be used as the SPAC’s working capital. After an acquisition, a SPAC is usually listed on one of the major stock exchanges.

Advantages of a SPAC

Selling to a SPAC can be an attractive option for the owners of a smaller company, which are often private equity funds. First, selling to a SPAC can add up to 20% to the sale price compared to a typical private equity deal. Being acquired by a SPAC can also offer business owners what is essentially a faster IPO process under the guidance of an experienced partner, with less worry about the swings in broader market sentiment.

SPACs Make a Comeback

SPACs have become more common in recent years, with their IPO fundraising hitting a record $13.6 billion in 2019—more than four times the $3.2 billion they raised in 2016. They have also attracted big-name underwriters such as Goldman Sachs, Credit Suisse, and Deutsche Bank, as well as retired or semi-retired senior executives looking for a shorter-term opportunity.

Examples of High-Profile SPAC Deals

One of the most high-profile recent deals involving special purpose acquisition companies involved Richard Branson’s Virgin Galactic. Venture capitalist Chamath Palihapitiya’s SPAC Social Capital Hedosophia Holdings bought a 49% stake in Virgin Galactic for $800 million before listing the company in 2019.1

In 2020, Bill Ackman, founder of Pershing Square Capital Management, sponsored his own SPAC, Pershing Square Tontine Holdings, the largest-ever SPAC, raising $4 billion in its offering on July 22.

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By: Myles Udland

Blank Check Company Definition A blank check company is a developmental stage company that has no specific business plan or has the intent to merge or acquire another firm.

moreInitial Public Offering (IPO) An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance.

moreShares Shares are a unit of ownership of a company that may be purchased by an investor.

moreSponsor A sponsor can be a range of providers and entities supporting the goals and objectives of an individual or company. moreConditional Listing Application (CLA) A conditional listing application (CLA) is an interim step in the listing process for the Toronto Stock Exchange (TSX).

moreLearn About Secondary Offering A secondary offering is sale of new or closely held shares of a company that has already made an initial public offering (IPO).

Stocks What Is a Blank Check Company? Career Advice What Is an Investment Banker? Mutual Fund Essentials Can Mutual Funds and ETFs Invest in IPOs? Private Equity & Venture Cap Understanding Private Equity (PE) Alternative Investments The Reality Of Investing In Space Exploration Company Profiles How Investment Banks Make Money

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